USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)

USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)
Shares of RossCorp stock are selling for $45 per share. Brokerage commissions are 2 percent for purchases and 2 percent for sales. The interest rate on margin debt is 6.25 percent per year. The maintenance margin is 30 percent.
-Refer to Exhibit 3.7. At the end of one year, shares of RossCorp stock are selling for $55 per share and the company paid dividends of $0.85 per share. Assuming that you borrowed 25 percent of cost of the purchase, what is your rate of return?

A) -23.51 percent
B) 29.35 percent
C) 23.51 percent
D) 5.21 percent
E) 10.06 percent

Correct Answer:

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